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I want to get right to the economic data of the day. It is Jobs Day and the change of non farm payroll came in one hundred and seventy seven thousand. Consensus was one thirty eight, so a beat there. The prior period was revised down sharply from two hundred and twenty eight thousand to one and eighty five, so some cross currents there. Let's break it down. Tom Gimball, Vice
chairman American Staffing Association and founder of LaSalle Networks. Hey, Tom, what do you take away from today's non farm payroll data?
I think it shows that the US economy is resilient.
I think that the tariff hubbabaloo for lack of a better word, hasn't hit yet.
Companies didn't know.
What to do following the announcement the first week in April, so we have some time to show up on that. And I think the real message is small and medium sized businesses always drive the jobs numbers more than anything else, and so if big companies do layoffs, small companies can now afford to hire some talent they couldn't before, and that's where you see a lot.
Of the hiring.
So since you run one of the leading staffing and recruiting firms in the country, who's staffing and recruiting.
Well, I think that that.
The companies that are hiring are small and medium sized companies.
You're not.
You know, when you see the announcements that a company like Starbucks is doing layoffs or what have you, is that you see that big companies have to cut overhead. But when you have small companies, you know, the two sectors that I see a lot continue to be our healthcare and you're going to have techn service firms, and service firms are going to continue to be doing consulting work.
There's technology bases, things along those lines that aren't as directly affected by lack of inventory and trade tariffs of importing products from other countries.
Tom some economists are concerned that tariffs and just economic uncertainty resulting from tariff discussions could hit small and midsized businesses harder because maybe they don't have the same profit margins and resources as some of the bigger companies. What are your respondents in your surveys telling you.
I think there's no doubt about that that I'm talking to leader CEOs of businesses every week, and there's obviously a concern due to the uncertainty of what's going on geopolitically and the tariffs. However, at the same time is that labor for the most part, can be scaled up and scaled down and companies right now have to focus on where the opportunities lie. And so what we see right now is there is a fear, there is an uncertainty. However,
there's also companies, small and medium sized companies. Again, I want to repeat, if you're a small manufacturing company, you've got real challenges. If you're a small distribution company, you've got real challenges. But if you're a consulting firm, if you're a services business, if you're a technology app development company, there's still opportunity because companies have to figure out workarounds to the situation, and those are usually going to be technologically based solutions.
To the other side of it, those small, medium sized businesses that are geared towards the consumer is selling stuff and products and manufacturing, et cetera. Are they laying off people or are they just not hiring?
No, I think you're seeing both. Listen, companies are laying off in good economies, companies lay people off. What you have is in a situation like this, companies have to look at their infrastructure. It's the same thing with unloading real estate during the COVID situation. They might not have needed it all along, but it gives them an excuse to do that. And so, you know, for lack of a better phrase, are companies pruning some talent right now?
They absolutely are.
And at the same same time, you see that if you go and look and search any job board, you're going to see that companies are also hiring weeks after they do layoffs because they're different skill sets, different positions, and so you know, the word hiring freeze is usually for new positions, but ones that are deemed to be necessary to the business, Companies are always going to be hiring in those spots.
Labor hoarding, that's a term I learned during a pandemic. I've never heard that before. Is that still a thing?
Tom, No, I don't think so.
You know, during the pandemic, when people were afraid that there was going to be a boom coming out and there ended up being one at the end of twenty and all of twenty one and summ of twenty.
Two, that made sense.
But right now companies are more sitting here saying what puts us in the strongest position to compete no matter what the economic climate. And if you're a big company, you do have excess labor, and so it's easy to cut that back.
If you're a small company, you.
Couldn't always compete against big companies because you can't pay the same wage. Well, when those big companies prune and late p people off, now you can get some of that talent for a little bit lower price. And at the same time those people are a little bit burned feel burned by the big companies. So you get a more engaged employee who really appreciates the quality of life at a smaller, medium sized company.
All right, we.
Appreciate it, Tom, Always good to get your perspective. Thank you so very much. Tom Gimbal, Vice chairman American Staffing Association and founder of LASAL Network, really helping understand the difference of the big large companies and the smaller medium sized businesses. I never thought that, like, if you get fired in a large firm that the small medium sized firm benefits.
That actually makes sense.
Good, Yeah, I guess in certain industries, yeah, certain areas. So I'll have to see.
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We also have an amazing bench of reporters as.
Well as bureau chiefs that we like to tap as well. We're going to go to one of them now, brook Sutherland. She is the Boston bureau chief, one of my favorite people, one of the smartest people that I've ever met. So the headline for Boston is that President Trump is announced that Harvard University would lose its tax exempt status and that threatens to revoke the school's financial benefits. Brook, what's the vibe in Boston right now.
I mean, I think the vibe is not great. I think there's a lot of concern about not just what happens with Harvard, but what happens with some of the other funding cuts, specifically around the NIH. I mean, this is an economy that really thrives off of its higher education institutions, its top tier hospitals, and its research facilities. And these organizations support a much broader ecosystem that is very linked to Massachusetts employment and the other overall health
of the state economy. And so this is an issue that state politicians have really, you know, rallied around Harvard for you know, in terms of just really pushing back on this and trying to protect those interests that are key to their economy. We've even seen, you know, the Republican candidate for governor coming out and advocating for the funding that goes to some of these institutions in the important role that they play in the Massachusetts economy.
What's the feeling a Brook as to the legality of such a move. Does the President have the legal authority to do so.
It's still not clear at this point whether or not his comments this morning about revoking Harvard's tax exempt status actually came in conjunction with the directive from the I R. S or from him in particular. It's it's not clear exactly sort of what steps are being taken or where we might be in any kind of process.
Now.
Typically the IRS standards prevent the President from interfering with federal tax agency decisions, and so this is undoubtedly something that if you know, the administration were to proceed with revoking targets Harvard's tax exempt status, that you would likely see the university challenge that, and it's a process that would take years to play out between appeals and you know, negotiations over what might happen here.
So the dum dums like me are going to be like, what's the big deal. They have a big endowment, they charge a lot to tuition, Like why do they need the status and what's the actual argument.
So the endowment is helpful, but you can't really use it like an ATM or you know, a piggy bank. The funds that are in there are mostly earmarked for certain programs, you know, scholarships, certain schools, and so they can't just use that money as they wish to plug whatever gaps that they might have. And you know, Harvard is certainly in a better position to weather this storm than a lot of institutions. It's one of the oldest
in the country and also the richest. But you know, I still think the financial toll of this can be really significant, and it can affect how the university dolls out financial aid. If they're not tax exept, they would also have to pay property taxes. They have a lot of real estate, not just in Cambridge, but also in Boston proper, and that bill alone would be extremely substantial.
And stripping Harvard's taxes and status would deal a significant financial blow to the university. This is in Bloomberg reporting, which receives an estimated foreigner and sixty five million dollars in tax benefits annually. And it's not just Harvard again, Brooke, looking at your report here, some seventeen hundred private colleges
operate as nonprofits. Given their contributions to society, they receive that benefit part of a section of the Internal Revenue Service tax Code, which specifically mentions education as being a purpose that can receive the exemption. So I'm guessing pretty much every private college and the university around the country brook is looking to this Harvard case.
I think they definitely are. I mean, I think there's a question of whether, you know, the administration is particularly targeting Harvard because it is so well known and so prestigious in terms of trying to effectuate some of the change that it wants to see on college campuses. You know, it's sort of making a model out of Harvard versus some of the other universities in the country. But certainly,
I think they are watching this very carefully. And if they're not, you know, directly connected to this particular fighter going to see their own tax exempt status called into question, they're likely feeling the pressure of the funding cuts because NIH funding does not just go to the Harvards and
the Mits of the world. It also goes to a number of other universities spread out all across the country that are doing, you know, very important work to advance US competitiveness and things that we've decided our national priorities, you know, things around national security, around medical advancements, semiconductor research, I mean, this all takes money, and historically that's a role that the government has played in supporting that research and innovation.
Uh Brook, before we let you go, also touted your expertise in the industrial industry. You've covered the industrial industry for a very long time. You have a weekly newsletter that sort of picks up on all the little details happening within that very important space. And in your piece today you talked about toothpaste versus which is like basically factory orders. Can you give me the takeaway from that? I thought it was quite interesting, is how we're looking at the economy.
Sure, I mean, I think there was a lot of concern heading into this earning season about what we might see from the manufacturing economy, the thinking being that that was sort of the front lines of where tariffs would hit. And these companies are certainly, you know, expecting an impact,
but by and large, they're mostly doing okay. I mean, the demand in the first quarter was very strong, and so far companies really aren't flagging any kind of material step back or you know, some sort of serious pause in projects. It's a very different story on the consumer side of the economy though. I mean, you've seen airlines pull their guidance because of a pullback and travel demand,
the concerns about consumer confidence. You've seen companies like Colgate palm Olive, which makes toothpaste, with sales dropped about three percent and the first quarter in part because customers are trading down from premium toothpaste options to sort of middle tier options, and that trade down effect is manifesting, you know, in a number of different places across the consumer economy,
and I think, you know, it's just interesting. There was an argument a few years ago about could you see sort of a decoupling of the manufacturing sector from the rest of the economy because there are sort of secular reasons driving construction of new factories, whether it's reshoring or you know, some of the energy initiatives that we've had, all of the government stimulus around infrastructure and semiconductors that didn't happen, And I think it would be extremely difficult
for that to happen again in an environment if we do see tariffs really damp and consumer confidence and really cause that consumer to pull back on spending. It's hard to keep industrial equipment orders going along at a role place when people can't afford sort of basic needs.
All right, Brooke, we really appreciate it. Thank you so very much.
Brooks Sutherland, Boston Bureau Chief in Industrials expert.
Right here at.
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For a recap.
Chevron made a bid Dubai, Hess has accepted, and then Exon came in and said, no, we have rite a first refusal to Hess's project in Guyana, which is a prolific oil region, and they've been an arbitration for quite a long time on that. We may get final result later on in this year. Vince Piazza heads up all our oil and industry coverage for Bloomberg Intelligence and joins me, Now, Vincent, what do you think of the answer that Nope, they got complete confidence.
If Chevron doesn't get Hess.
What happens, well, look is, if Sevron doesn't get Hess, someone of size would need to make a move on Hess, right, and you.
Know Exon suggests that it has these preemptive rights, and so if the arbitration goes in its favor, there would be a decision that needs to be made about that value and what that value is. And I would suggest to you that because of Hesse's size, the number of suitors for hes whether it's the asset or the entire entity, is quite limited, and you need someone that has the heft, the balance sheet, the flexibility, the financial flexibility of an Exon mobile and so I think both entities have a
solid case to be made. I've never heard of an acquisition being held up because of a shared asset, but you know, a lot of strange things that happened in the world in the last year or so, so we'll see what happens. But I think if you take a look at just the earnings from today, guys, I think it's obvious that Exon is pulling away both operationally and financially.
And I think that if you were to take a look at this a year from now, you would see the ongoing strength of the Exon operations and Exon's financial health. Financial health.
Right, So, hey, Vince, you've been covering these big oil companies integrated oil companies for years. Here what are they telling you with about life at blows sixty dollars a borrower around sixty dollars a borrower for WTI crud.
You know, life is sustainable when you have solid balance sheet and you have the financial strength. And in this case you have Exon Mobile, which paid back roughly five billion of debt. Balance sheet leverage is very, very manageable. They have the financial flexibility to push forward financially. They threw off about nine billion of free castulow eight point eight to be exact. The cadence of buybacks remains the same,
the dividend pace remains the same. So there is strength there in their confidence in their decision to maintain those levels. Contrast that with what you heard from Stevron. And when you're throwing off roughly a billion dollars of free castlow and you're trying to pay out dividends of three and do buybacks of another four, the math doesn't compute right, and so that pretends the decision to scale back the buy backs closer to what two and a half or
three billion four to twenty twenty five. Hey, look, you know, operationally, Exon's in a strong position, especially in Guiana, especially in the Permian. You have a yellow tail likely coming on sooner than expected, most likely in three Q. That's two hundred and fifty thousand barrels a day of growth capacity on a resource that has potential of well in excess of six billion dollars. So you could understand the attraction for both Exon and for Devron, and you know Exon's
and a driver feet there. You have also for Exon the pioneer acquisition the Permium basin, which remains a strong, low cost avenue for growth. So I'm not really concerned here if this dips below the sixty six dollars Bollol range, especially when you have the balance sheet strength to push through that. Now, fifteen twenty years ago, the economics were different, right leverage was a bigger thwart and also a bigger
thwart of pain for these organizations as well. But for the most part, a lot of these names have gotten their balance beats, and the right size and the right gape maturities are quite manageable in twenty five and twenty six, so I don't see the pain coming from any type of balance sheet event. And for the most part, what we're telling the operators is, let's manage that production. We
want to see the free cashulow being thrown off. We don't want this excessive accelerated growth that we saw during a one point zero. We're in a different situation here. It's a mature industry. What we do want to see
is much more capital discipline. It's fine if you want to go out there and pay for an asset using your currency, using you for equity, because your equity is valued higher than what a private equity sponsored company may be, and you can consolidate, integrate and actually increase recash flow going forward as well.
All Right, Ben, thanks a lot. We really appreciate it.
Vincent Piazza, he covers Boom, all the oil companies E ANDPS as well as the big guys for Bloomberg Intelligence.
We appreciate all of that insight. Shameless Plug.
You can check out my full cheve On interview on the Bloomberg podcast page on YouTube. It's also available on Bloomberg dot com, and you can also check it out on the terminal as well.
Shameless plug, I did it.
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